Date: 20011127
Docket: T-2489-97
Neutral citation: 2001 FCT 1304
Toronto, Ontario, Tuesday, the 27th day of November, 2001
PRESENT: Roger R. Lafrenière, Esquire
Prothonotary
SIMPLIFIED ACTION
BETWEEN:
CALVIN W. SPROULE
Plaintiff
- and -
THE M.V. "COMPASS ROSE II" and her Owner WAYNE COADY
and ALL OTHERS INTERESTED IN THE VESSEL
(Action in rem against the Vessel M.V. "COMPASS ROSE II" and in personam
against Her Owner, Wayne Coady and all others interested in the vessel)
Defendants
REASONS FOR JUDGMENT AND JUDGMENT
LAFRENIÈRE P.:
[1] These written reasons confirm those I gave orally from the bench at the conclusion of a one day trial in St. John's, Newfoundland.
[2] The trial was conducted in accordance with the simplified action procedure set out in Rule 299 of the Federal Court Rule, 1998 which requires that evidence-in-chief of the parties be adduced by affidavit and that any deponent of an affidavit be made available for cross-examination at the hearing. Three affidavits were filed: one by the Plaintiff, Calvin Sproule, one by the Defendant, Wayne Coady, and one by David Andrews. All three deponents were cross-examined before me at the election of the opposing party.
Evidence -in-chief of the parties
[3] Mr. Sproule seeks to recover from Mr. Coady the amount of $25,000.00 which he claims remains owing pursuant to an agreement for purchase and sale of a vessel. The relevant facts and circumstances upon which Mr. Sproule's claim is based are set out in his affidavit, extracts of which are reproduced below. The paragraphs have been re-numbered for the purpose of these reasons.
1. My claim is for the recovery from the Defendant in rem and in personam, jointly and severally, for an unpaid account arising from an Agreement of Purchase and Sale (the "Agreement") of the "Compass Rose II (the "Vessel") on April 13, 1995.
2. By the Agreement, a copy of which is attached hereto as Exhibit "A ", I agreed to sell to the Defendant, Wayne Coady, the Vessel for the sum of $610,000.00 payable as follows:
(1) $50,000.00 upon execution of the Agreement;
(2) Lump sum payments of $25,000.00 each on September 15, 1995, December 15, 1995 and September 15, 1996;
(3) 25% of the gross stock to be paid by the purchaser at every settlement together with a copy of the settlement sheet; and
(4) the balance in full on or before December 31, 1996.
3. The Defendant, Wayne Coady, made the following payments pursuant to the terms of the Agreement:
April 1995 - $ 50,000.00
June 1995 - $ 62,021.57
June 1995 - $ 5,664.38
June 1995 - $ 15,841.88
July 1995 - $ 2,650.00
August 1995 - $ 8,761.18
August 1995 - $ 9,230.22
September 1995 - $ 25,000.00
September 1995 - $ 6,937.50
October 1995 - $ 6,492.63
November 1995 - $ 10,353.00
Subtotal of Payments - $202,952.36
Sale Price - $610,000.00
Less Payments - $202,952.36
Balance at 12/31/95 - $407,047.64
Amount paid April 1996 - $382,047.64
Balance outstanding - $ 25,000.00
4. Wayne Coady breached the Agreement by failing to pay $25,000.00 on December 15, 1995 and at the time of execution of this Affidavit there remains unpaid under the Agreement the sum of $25,000.00.
5. The Defendant continued to assure me by telephone after non-receipt of the $25,000.00 payment due on December 15, 1995 that the balance due and owing for the Vessel would be paid in full early in 1996, as soon as the money became available.
6. I did not take any action between December 15, 1995 and April 17, 1996 to compel payment of the overdue $25,000.00 because I trusted that the Defendant would keep his word and pay the amount due and owing.
7. I did receive the sum of $382,047.64, such funds being hand delivered by the Defendant to me, at which time I concluded the transaction under the mistaken belief that such sum was the balance owing at that time.
8. The Defendant did advise me in November 1995 that he wished to close out the sale early and that he did not wish to wait until December 31, 1996.
9. I have read the Defendant's Pre-trial Conference Brief at paragraph 4, wherein the Defendant indicates he suggested a reduction of $40,000.00 in consideration for the early closing and I have no recollection of this occurring.
10. I did not enter into an agreement with the Defendant whereby I was to accept a reduction of $25,000.00 in the amount due and owing in consideration for receiving early payment and early closing of the sale.
11. I did not advise the Defendant that the $25,000.00 due on December 15, 1995 would be forgiven.
12. I did mistakenly advise my lawyer, James L. Outhouse, that the balance due on the sale of the Vessel was $382,047.64. This figure had been represented to me by the Defendant's lawyer and I had no reason to believe it was not the true amount owing.
13. Upon receipt of the sum of $382,047.00 I provided the Defendant with a Bill of Sale in Form No. 6, a copy of which is attached hereto as Exhibit "B", showing that the consideration for the sale had been $610,000.00 and that full payment had been received.
14. I was advised by my accountant, Alan Trimper, after the closing of the sale of the Vessel that the account had been short paid by $25,000.00. My accountant advised me of this shortfall in April of 1997 at which time he was preparing my Income Tax Return.
15. On September 24, 1997, the Defendant was served with a Demand Letter requesting that he pay to me $25,000.00, that sum being the amount short paid under the Agreement.
16. The Defendant, through his counsel, refused to pay the outstanding account as requested in the Demand Letter and this Simplified Action was commenced as a result.
17. At the time of filing of this Affidavit with the Court the Defendant continues to owe me the sum of $25,000.00 and has not made arrangements to pay the account.
[4] In his affidavit filed in response, Mr. Coady confirms having entered into an agreement with Mr. Sproule to purchase the COMPASS ROSE II for $610,000.00. Mr. Coady also confirms that by the end of November 1995, he had made payments totalling $202,952.36 and made one final payment of $382,047.64 on April 17, 1996. He disputes however that he owes $25,000.00 to Mr. Sproule or that he is otherwise in breach of contract.
[5] Mr. Coady maintains that he reached a verbal agreement with Mr. Sproule in November 1995 whereby the December 15, 1996 payment of $25,000.00 would be waived in consideration for an early closing. The circumstances surrounding the said arrangement are set out in his affidavit as follows:
7. At this stage, in November 1995, there was still due by me the sum of $407,07.64, including a required payment of $25,000.00 due on December 15th, 1995. I spoke with Mr. Sproule in November 1995 and advised him that I wished to close the sale out early, and not wait until December 31st, 1996 to conclude the matter. In consideration for closing out the sale early, I wished to obtain a deduction of the amount due which stood at $407, 047.64 to be paid no later than December 31st, 1996, and I sought from Mr. Sproule a deduction of $40,000.00. Mr. Sproule was not agreeable to that, but he did agree to a $25,000.00 reduction, and stated to do this by forgetting the $25,000.00 payment due on December 15th, 1995, and that therefore would leave a balance due on early closing of $382,047.64.
[6] To corroborate his version of events, Mr. Coady produced personal notes written after the above exchange. The relevant portion of his notes states simply: "Calvin willing to deduct $25,000.00". Mr. Coady claims that the notes were written in late 1995 or early 1996 prior to a meeting with Shawmut Fisheries to discuss a guarantee for mortgage financing.
[7] Mr. Coady also produced a letter dated April 10, 1996 from Mr. Sproule's lawyer, James L. Outhouse, to his own lawyer, David Andrews. Mr. Outhouse indicates in the letter that he has an executed Bill of Sale and inquires whether it can be sent to Mr. Andrews for completion, subject to the purchase funds which he understands to be $382,047.64 being available. Mr. Coady suggests that the pay-out figure, which reflects a $25,000.00 discount, could only have been provided to Mr. Outhouse by his client, Mr. Sproule, and that the stated amount is consistent with their verbal agreement.
[8] Mr. Coady challenges other allegations in Mr. Sproule's affidavit. In particular, he disputes that he personally handed over the balance of the purchase funds to Mr. Sproule. According to Mr. Coady, he drove Mr. Sproule from St. John's to Bay Roberts on April 17, 1996 for a meeting with his lawyer, Mr. Andrews. While in his truck, Mr. Coady overheard Mr. Sproule speaking by telephone to Mr. Andrews. According to Mr. Coady, Mr. Sproule told Mr. Andrews that he had "knocked off enough already", that he was not willing to wait any longer and that if his cheque wasn't ready when he got to Mr. Andrew's office "the deal was off".
[9] Mr. Coady states that he arrived at the law firm a few hours later with Mr. Sproule at which time Mr. Andrews arranged for execution of the Bill of Sale by Mr. Sproule and handed him a cheque in the amount of $382,047.64. He indicates that he heard nothing further from Mr. Sproule until September 1997 when Mr. Outhouse issued a demand letter.
[10] David Andrews states in his affidavit that he was hired by Mr. Coady to act as his lawyer for the purchase of the vessel. He confirms that he received the letter dated April 10, 1996 from Mr. Outhouse advising him that the outstanding balance was $382,047.64. At no time does he recall the pay-out figure being questioned by anyone, including Mr. Sproule. Mr. Andrews confirms as well that Mr. Sproule attended at his office on April 17, 1996 and was handed a cheque for $382,047.64.
Cross-examination of witnesses
[11] In cross-examination, Mr. Sproule acknowledged that Mr. Coady raised with him the possibility of getting a deduction but disagreed that the matter came up in November 1995. He insisted that it was Mr. Coady who was pushing to pay the boat off early and that although he was interested in getting paid earlier, he never agreed to reduce the purchase price or waive the December 1995 payment.
[12] When confronted with a statement in his affidavit stating that Mr. Coady advised him in November 1995 that he wished to close out the sale early, Mr. Sproule replied that he didn't recall the conversation having taken place in November. He agreed that his affidavit contradicted his oral testimony but insisted that the matter of a deduction was not raised until much later. He offered that his affidavit was likely inaccurate.
[13] Mr. Sproule conceded that he took no formal steps to note Mr. Coady in default under the contract or to compel payment subsequent to December 1995, other than speaking to him. It wasn't until he became aware of the error in April 1997, when his accountant discovered the shortfall, that he decided to take action.
[14] As for the trip to Bay Roberts, Mr. Sproule "vaguely remembered" that Mr. Coady had driven him to Mr. Andrews' office to sign the Bill of Sale and to pick up the cheque for the balance owing. He couldn't recall having spoken to Mr. Andrews by telephone beforehand, but did acknowledge having signed the Bill of Sale at Mr. Andrews' office and then receiving a cheque in the amount of "$383,000 odd dollars".
[15] When asked whether he had given the pay-out figure to Mr. Outhouse, Mr. Sproule replied that he couldn't be sure, but that in any event the amount was incorrect. When questioned further, he conceded that his affidavit confirms that he had advised his lawyer, albeit "mistakenly", that the balance due was $382,047.64. Mr. Sproule allowed that such communication would necessarily have taken place prior to April 10, 1996.
[16] Mr. Coady was the next witness to be cross-examined. When asked why the oral agreement was not committed to writing, Mr. Coady said that he assumed that the terms were understood by the parties. He agreed that looking strictly at the written agreement, he was in breach of contract. Mr. Coady did not dispute that a letter from Mr. Andrews to Mr. Outhouse dated April 17, 1996 and the Bill of Sale were incorrect in reflecting the amount paid as $610,000.
[17] The last witness to be cross-examined was David Andrews. He said that he received the letter dated April 10, 1996 and that, to his knowledge, he had obtained the pay-out figure from Mr. Outhouse. He couldn't recall if he spoke to Mr. Coady to confirm the amount owing, but agreed that it was his practise to do so when dealing with such transactions. In addition, he had no recollection of having discussed the amount owing with Mr. Sproule.
[18] In re-direct, Mr. Andrews said that he first met Mr. Sproule when he attended at his office for execution of the Bill of Sale. Mr. Andrews recalled receiving a telephone call from Mr. Sproule and being told by him that he was on his way to his office. He remembered that Mr. Sproule sounded anxious to get his money, but could not recall whether Mr. Sproule said that he had "knocked off enough already".
Submissions of the parties
[19] Counsel for the Plaintiff submits that the terms of the written agreement must govern. He argues that the Defendant failed to establish that a verbal agreement was reached to waive the December 1995 payment in return for an earlier closing. Counsel says that there was no real incentive for the Plaintiff to agree to such an arrangement. He concedes that a mistake was made in communication of the balance due on closing and that the Plaintiff may have been partly responsible, but he insists that the error was innocent and cannot be relied upon by the Defendant to his client's prejudice. Counsel further submits that the Defendant cannot avail himself of parol evidence to vary the written agreement. The parties settled on the purchase price of $610,000.00 and the Plaintiff is therefore entitled to full payment in accordance with the agreement, along with costs of the action. In the event the Court should conclude that there was a valid oral agreement, the Plaintiff requests a declaration that the written agreement be rectified, suggesting that it is simply unfair for the Plaintiff to incur a tax liability for monies he never received.
[20] Counsel for the Defendant rejects the suggestion that a mistake was made by the parties. He submits that the evidence clearly points to the existence of a verbal agreement whereby the Plaintiff would discount the purchase price by $25,000.00 in return for an earlier closing. He points out that the Plaintiff benefited from the arrangement since the written agreement did not provide for any interest on the balance due and receipt of payment eight months earlier was necessarily advantageous to the Plaintiff. Counsel reviewed in detail what he characterizes as inconsistencies in Mr. Sproule's evidence and suggests that the witness is simply unreliable. He urges that the Defendant's evidence be preferred in the circumstances.
Analysis
[21] Based strictly on the terms of the written agreement, the Plaintiff would be entitled to recover from the Defendant the amount of $25,000.00, which admittedly has not been paid. The Defendant claims however that the parties reached an oral agreement that precludes the Plaintiff from enforcing his contractual rights.
[22] Whether or not a binding oral agreement is concluded depends on the particular facts of each case: Mark Fishing Company Limited v. Northern Princess Seafood Limited, (1990) 38 F.T.R. 299 at 305. In my view, the parol evidence rule does not apply since the Defendant does not seek to adduce extrinsic evidence to add to, subtract from or vary the meaning of the written agreement. He simply claims that the agreement was amended verbally. In the circumstances, the burden rests with the Defendant to establish, on a balance of probabilities, the existence of such an agreement.
[23] After weighing the evidence presented, I am satisfied that a verbal agreement was reached between the parties some time in November 1995 whereby the Plaintiff waived the $25,000.00 payment due on December 15, 1995 in consideration for earlier payment. In reaching this conclusion, I have preferred the evidence of Mr. Coady and Mr. Andrews, which I found to be coherent and plausible, over that of Mr. Sproule. The latter's evidence as a whole proved unreliable, particularly in light of misstatements regarding significant facts and other inconsistencies, examples of which are reviewed below.
[24] First, Mr. Coady said that he canvassed with Mr. Sproule the possibility of an earlier closing in return for a discount in November 1995. His version was corroborated to some extent by the following statement in Mr. Sproule's affidavit:
"The Defendant did advise me in November 1995 that he wished to close out the sale early and that he did not wish to wait until December 31, 1996."
[25] Mr. Sproule sought to distance himself from his sworn statement by claiming it was incorrect. However, I am not satisfied that the discrepancy in his evidence can be explained away as a mere error or oversight. Mr. Sproule's affidavit was sworn with full knowledge of Mr. Coady's allegations and the significance of the timing of this particular exchange ought to have been apparent at the time the affidavit was executed. I therefore prefer Mr. Coady's evidence that a discussion regarding an early closing took place, as he alleges, in November 1995.
[26] Secondly, Mr. Coady claimed that he initially requested a $40,000.00 discount from Mr. Sproule in consideration for earlier payment. Logic dictates that a quid pro quo would have been sought for volunteering to accelerate payment of a substantial amount of money months earlier than required under the contract. It is certainly odd that Mr. Sproule would respond to this allegation by saying that he had no recollection of such a request. I would have expected a straight denial if no such discussion had taken place.
[27] Thirdly, Mr. Sproule declared in his affidavit that the figure of $382,047.64 had been represented to him by the Defendant's lawyer and that he had no reason to believe it was not the true amount owing. Yet, he admitted in cross-examination that he couldn't be sure that the figure was provided to his lawyer by Mr. Andrews. In my view, the allegation was wholly unfounded and was intended to improperly lay the blame for the alleged mistake in quoting the pay-out figure on Mr. Coady.
[28] Fourthly, Mr. Sproule inaccurately stated in his affidavit that the pay-out funds were hand-delivered to him by Mr. Coady. Although the error appears inconsequential, it masks the fact that Mr. Sproule dealt not only with Mr. Coady, but also with Mr. Andrews. I find it curious that Mr. Sproule would conveniently avoid mentioning his meeting with Mr. Andrews at his office in his affidavit. One is left to wonder whether all relevant information has been volunteered.
[29] In light of the above, I place more credence on the evidence presented by the Defendant, which has not been seriously undermined by the Plaintiff. I did not however give any weight to Mr. Coady's personal notes which purport to reflect the oral agreement since they were not prepared contemporaneously and could easily have been influenced by subsequent events.
[30] In conclusion, I find that a verbal agreement was reached between Mr. Sproule and Mr. Coady in November 1995 whereby the Plaintiff agreed to reduce the purchase price by $25,000.00 in consideration for earlier payment. I find that the parties fulfilled their respective obligations under the verbal agreement on April 17, 2001 and that Mr. Coady was released as a result from his obligations under the written agreement by operation of the defence of accord and satisfaction. Consequently, the Plaintiff's claim shall be dismissed.
[31] I agree with the Plaintiff that the Bill of Sale incorrectly reflects the amount received. The Plaintiff is not obliged as a matter of law to pay tax on any amount that was not paid. It may be that the relief is available should the Plaintiff apply for a reassessment of taxes. These reasons for judgment could be referred to in any such application and will no doubt be given due consideration.
JUDGMENT
1. The action is dismissed, with costs to the Defendant, Wayne Coady, hereby fixed at $1,930.00, inclusive of disbursements.
"Roger R. Lafrenière"
Prothonotary
Toronto, Ontario
November 27, 2001
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
COURT NO: T-2489-97
STYLE OF CAUSE: CALVIN W. SPROULE
Plaintiff
- and -
THE M.V. "COMPASS ROSE II" and her Owner WAYNE COADY and ALL OTHERS INTERESTED IN THE VESSEL
(Action in rem against the Vessel M.V. "COMPASS ROSE II" and in personam
against Her Owner, Wayne Coady and all others interested in the vessel)
Defendants
DATE OF HEARING: THURSDAY, NOVEMBER 9, 2000
PLACE OF HEARING: ST. JOHN'S, NEWFOUNDLAND
REASONS FOR JUDGMENT
AND JUDGMENT BY: LAFRENIÈRE P.
DATED: TUESDAY, NOVEMBER 27, 2001
APPEARANCES: Mr. Kenneth Templeton
For the Plaintiff
Mr. John Sinnott, Q.C.
For the Defendants
SOLICITORS OF RECORD: STEWART McKELVEY STIRLING SCALES
Barristers & Solicitors
Cabot Place, 100 Gower Street
P.O. Box 5038, Station C
St. John's, Nfld.
A1C 5V3
For the Plaintiff
LEWIS SINNOTT
Barristers & Solicitors
301-140 Water Street, TD Place
P.O. Box 884, Station C
St. John's, Nfld.
For the Defendants
FEDERAL COURT OF CANADA
Date: 20011127
Docket: T-2489-97
Between:
CALVIN W. SPROULE
Plaintiff
- and -
THE M.V. "COMPASS ROSE II" and
her Owner WAYNE COADY and ALL
OTHERS INTERESTED IN THE
VESSEL(Action in rem against the Vessel
M.V. "COMPASS ROSE II" and in
personamagainst Her Owner, Wayne
Coady and all others interested in the
vessel)
Defendants
REASONS FOR JUDGMENT
AND JUDGMENT
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